Eight out of 10 companies do not plan to change their pension scheme when the Government’s new personal accounts are launched, research has shown.
Around 80% of employers said they would keep their existing pension arrangements in place when the low-cost accounts are introduced in 2012, with just 2% of firms saying they would offer only the new accounts to their staff, according to Punter Southall Financial Management.
The research goes some way towards allaying fears that companies will down-grade their pensions to the minimum level required by the new legislation.
Personal accounts are being launched to coincide with new rules that come into force in 2012, under which workers will automatically be enrolled into a workplace pension scheme, although they will retain the right to opt out.
Individuals will have to have at least 8% of their annual salary paid into a pension, typically made up of employer contributions of 3%, with workers paying in 4% and the Government adding 1%.
The survey, which was based on responses from 300 companies, also found that only 5% of firms now have a final salary pension scheme which is still open to new members, with other companies offering defined contribution schemes, in which employees shoulder all the risk, instead.
Just under half of pension schemes have been reviewed during the past 12 months, but 14% had not been reviewed for at least five years.
The research also found that the majority of workers are opting for the default investment fund offered by defined contribution schemes, rather than picking one for themselves.
Six out of 10 companies said they thought they had a responsibility towards financially educating their staff, but 57% admitted they did not promote their pension to workers who had not joined it.
The Personal Accounts Delivery Authority, overseeing the introduction of the accounts, said: “Our target market is people on low to middle incomes, many of whom currently do not have access to a workplace pension. We don’t expect huge numbers of companies with existing provision to use us across their workforce – we are designed to complement existing provision.”
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